China to Implement Reserve Requirement Ration

China will start implementing a reserve requirement ratio (RRR) on some banks involved in the offshore yuan market, the People’s Bank of China (PBOC) said on Monday, in what appears to be its latest attempt to stem speculation in the currency. Sources told Reuters on Sunday that the PBOC is preparing to raise the reserve requirement ratio next week for yuan deposits placed in yuan clearing banks. The rate is currently at zero. The PBOC confirmed the move would be effective on Jan. 25, but made no mention of increasing restrictions on banks in its statement. Some analysts said the announcement may at this stage be a more symbolic warning to banks, aimed at discouraging them from being too active in yuan dealings as part of the PBOC’s broader campaign to stabilise the yuan in offshore markets. The offshore yuan, or CNH, fell earlier this month to its lowest level since trading began in 2010 on fears that China was planning to sharply devalue its currency to boost the slowing economy